Asked by Austin Collins on Jun 29, 2024
Verified
A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers)
A) different prices to compensate for differences in the characteristics of the product.
B) the same price if per unit cost is constant for each unit of the product.
C) that price that equals the buyer's marginal cost.
D) the maximum price each would be willing to pay.
Price Discriminating
A pricing strategy where identical or similar products or services are sold at different prices to different buyers.
Marginal Cost
The outlay involved in generating one more unit of a product.
Buyer's Willingness
The maximum amount a consumer is ready to pay for a good or service, reflecting the value they place on it.
- Master the understanding of the concept and the logic underpinning price discrimination in monopoly settings.
- Explain the conditions necessary for successful price discrimination.
Verified Answer
EG
Emily GuggenheimJul 02, 2024
Final Answer :
D
Explanation :
A price discriminating pure monopolist aims to maximize profits by charging each buyer the maximum price they are willing to pay, rather than a single price for all buyers. This strategy does not necessarily relate to differences in product characteristics, per unit cost constancy, or the buyer's marginal cost.
Learning Objectives
- Master the understanding of the concept and the logic underpinning price discrimination in monopoly settings.
- Explain the conditions necessary for successful price discrimination.
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